While the April 2 tariff announcements were more severe than anticipated, Vanguard’s active fixed income managers were well-prepared for the subsequent market reaction, having trimmed credit risk and moved up in quality, while utilizing duration as a hedge. Amid continued market and policy uncertainty, fixed income remains a crucial component of a diversified investment strategy—serving as a long-term portfolio ballast and providing attractive yields by historical standards.

Putting recent market volatility into historical context can help clients tune out the noise and focus on the long term. This article emphasizes the enduring value financial advisors provide clients as they guide them through market uncertainty.

To understand the challenges of managing bond index funds, consider two data points: The Bloomberg U.S. Aggregate Bond Index contains more than 13,000 securities, while the CRSP U.S. Total Market Index comprises about 3,600 securities. The breadth of the fixed income market is just one of the challenges bond index fund managers face.

Investors are uneasy. To make sense of today’s volatility, it can be helpful to look at the past. It demonstrates that volatility isn’t one-directional or constant in magnitude, nor is it always spurred by the same type of risk.